Hiring Agency Workers? Do You Understand Your Legal Responsibilities?

Engaging agency workers offers ease and flexibility, but employers who believe that they thereby divorce themselves from all legal responsibility are sadly mistaken. In a guideline case on point, a transport company was ordered to compensate agency workers who were paid less than their directly employed colleagues.

For a period of almost two years, the company failed to comply with its duties under the Agency Workers Regulations 2010 to afford equal pay to workers it had hired from an agency. After acknowledging its error, the company equalised the agency workers’ pay and remitted sums to the agency which covered the previous underpayments. Those sums were, however, retained by the agency and not passed on to the workers before it went into involuntary liquidation.

After complaints were lodged by two of the agency workers – who acted as lead claimants – an Employment Tribunal (ET) found that the agency and the company, as hirer, each bore 50 per cent responsibility for the breaches of the Regulations. The ET declined to order the company to pay compensation to the workers on the basis that it would not be just and equitable to do so. That ruling was, however, subsequently reversed by the Employment Appeal Tribunal.

In dismissing the company’s challenge to that decision, the Court of Appeal noted that the agency workers’ rights to equal pay were enforceable against both the agency and the company. They suffered an actionable loss on each and every occasion that they were underpaid. The agency’s failure to pay the sums due, even when put in funds to do so by the company, did not break the connection between the workers’ losses and the company’s breaches: it simply meant that they continued.

The company had chosen to use agency workers in the first place and was partly responsible for the original underpayments. The workers were also in a much weaker bargaining position than either the company or the agency. In those circumstances, they were entitled to be compensated for the underpayments on a pound-for-pound basis. The Court’s ruling rendered the company liable to pay 50 per cent of the compensation due to the workers. The amount of their awards will be assessed at a further ET hearing.